How the Collapse Will Play Out and How to Play For It

Phoenix Capital Research's picture

 As I’ve noted in recent missives to you, the world financial system has begun the Great Collapse: the Crisis I’ve been warning about for over two years. I wanted to take some time to explain what is going to be coming this way

The first wave is going to come from Europe where it is clear that the ECB has reached the End Game of monetary intervention. Germany has said “NEIN” regarding further bailouts for Greece. No German backing… no bailouts… no EU.

So Greece will default. And the bondholders will take a 50% haircut if not more. But Greece is the last of Europe’s worries. Indeed, there is a MUCH bigger problem here and that problem is the same one that created the 2008 disaster: DERIVATIVES.

US commercial banks have over $200 trillion in derivatives outstanding on their balance sheets. However, worldwide, the derivatives market is over $600 TRILLION in size. And the financial system in Europe is as saturated, if not MORE saturated with toxic debt than the US financial system.

According to the Bureau of International Settlements, the total exposure worldwide to PIGS (Portugal, Ireland, Greece, and Spain) debt is over $2.5 TRILLION. Most of this is in the form of derivatives. And 70% of it is from foreign entities (banks and firms located outside of the country).

Let’s take Greece for instance. Courtesy of derivatives, France has $92 billion in exposure to Greece debt. Germany is on the hook for $69 billion. Great Britain has $20 billion. And the US has $43 billion.

These levels, while dangerous, are not catastrophic. As I’ve stated before, Greece is NOT the big problem for the EU. However, worldwide exposure to Greek debt is in the ballpark of $277 billion. So a default there would result in significant market dislocations.

Now consider the exposure to a BIG Problem such as Spanish debt. In this situation, Great Britain is on the hook for $51 billion. The US is on the hook for $187 billion. France is on the hook for $224 billion. And Germany is on the hook for a whopping $244 billion.

As I said before, Greece is ultimately a small player in this mess. Worldwide exposure to Greek debt is $277 billion. Worldwide exposure to Spain, on the other hand, is north of $1 TRILLION.

Now this is where things get REALLY tricky. Because of the intertwined nature of the derivatives market, a Greek default could result in systemic risk for the simple fact that if one of the banks that goes down with Greece has extensive exposure to Spain as well, then things could get ugly very, VERY fast.

We are close DARN close to this happening. And when it does, we’re going to see a Crisis that makes 2008 look like a picnic.

If you have yet to prepare yourself for what’s coming, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.

Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).

Best of all, this report is 100% FREE. To pick up your copy today simply go to: and click on the OUR FREE REPORTS tab.

Good Investing!

Graham Summers

PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years or the best most profitable strategy for individual investors looking to profit from the upcoming US Debt Default, my reports covers it.

And ALL of this is available for FREE under the OUR FREE REPORTS tab at:

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TBTF's picture

I think you forgot the part about mentioning how it plays out...

YesWeKahn's picture

REally hope that you become bullish one day, we might miss another bull market.

RMolineaux's picture

I wonder if Mr. Summers does not feel a little uncomfortable in suggesting how folks can profit in a situation where Wall Street is blocked by a people jam, no reporting comes out of the exchanges, food deliveries are suspended and looting and riots have begun.  I hope some of his vulture friends end up as dumpster divers.



gwar5's picture

Graham Summers

"PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years or the best most profitable strategy for individual investors looking to profit from the upcoming US Debt Default, my reports covers it."



Dood, why don't you throw us a bone once in a while and tell us what one of your strategies is?  That way we know it's worthwhile before we give up our personal information. You got anything different from Schiff, Rogers, Farber, et al?  

mayhem_korner's picture
How the Collapse Will Play Out and How to Play For It

Two points here.  One, no one "knows" how the collapse will play out.  What we have conviction about is that the circumstances are irrevocably in place for massive change in the financial systems to which many have become accustomed and reliant.

Moreover, the notion of a singular collapse is misplaced.  For those in MENA, The Collapse has already happened to them.  In a slow-moving contagion, people are overtaken in lots - some small, some mass.  Kind of like influenza - it migrates and metastacizes, but its presences seems irrelevant until it grips one personally. 

And so "the Collapse" for someone deeply indebted will be different and occur at a different time than a renter; in the same way an urban dweller reliant on public services will be affected differently than a live-off-the-land ruralite.

Bottom line: apart from the worn-out, sensationalized tag line, the notion of a common plight for all is misplaced.  Insights are circumstance-specific; these broad-brush proclamations sorta just take up space.

My two cents...

Shell Game's picture

Thank you, it needed to be said.

tchild2's picture

Mayhem_Korner, very succinct and insightful comments and observations.  Indeed, the collapse will not be some sort of homogeneous event shared by all with the same outcome and experiences.



Ned Zeppelin's picture

Who is the fake Tyler on this thread - nasty stuff, most unbecoming of our Heroic One.  Methinks someone has invaded the Castle ZH and taken over the computers! 

Time to delete the phony Tyler. 

Ned Zeppelin's picture

The Germans will approve this bastard child of TARP, over strenuous public objections, just as it was passed on the second try here in the US. The banksters are fully in control.  Watch the global equities rise up to 5% on the news. But it will be no different in terms of outcome. The bad debt sits and festers, plastered over with more debt, until finally it will burst forth as a stinking septic mess.  

But another year's bonuses will have been paid, so who gives a flying fuck, right? 

sgorem's picture

correct me if i'm wrong, but i believe the German Constitution forbids the government from "tarping" out "any other sovereign country". or some similar facsimile, without a vote of the citizens to change said constitution............

Buck Johnson's picture

They are trying to revive a corpse, and it's just not possible.  When this start to unwind it will come hard an fast and literally be uncontrollable.  He is correct, the banks are interconnected in their debt and assets.  So if one has a bad day from Greece defaulting, by it trying to sell off it's debt or getting it's money from another country will start a chain reaction.

moondog's picture

MY EYES!!!! AAAAAHHHHHHHH!!! Thanks TD, now I'll have the picture of that naked fat old guy burned in my memory. Damnit, curiosity killed the cat allright....

Blano's picture

That's not TD......look at the name.

Long-John-Silver's picture

It's an IMP. I'm sort of shocked this troll has not been kicked off yet.

jomama's picture

ppl don't get banned from ZH.  one of the reasons that makes it so great here.

don't worry - the novelty will wear off for him soon enough.

LookingWithAmazement's picture

Finally, collapse. It's about time. Oh no, wait. Germany on Thursday will say JA to a new bailout of Greece. German parliament will agree with the July 21 package, as the 8th eurocountry. No Armageddon. Then the rest will follow suit, just like "eurosceptic" Finland recently did, including expanded powers of the EFSF. No Armageddon. Beginning of October, the "Troika" will agree with the 8 billion tranche out of package one. After all, otherwise Armageddon breaks loose. No Armageddon. In December, this whole circus will repeat itself. No Armageddon. Same goes for 2012. No Armageddon. Merry Christmas and a happy 2012. Boring world we live in.

Dugald's picture

Dont be down could get a shiny new war for Christmas

PulauHantu29's picture

How Doomed is our economy?


Stock Market...plunging... interest...

Deflation....picking up momentum...


Unless Ben wakes up we will sink into a Deep Long Depression....

Rainman's picture

Relax.......GM is hiking wages and giving out signing bonuses. Opening new plants. As GM goes, so goes the country.

3rivers's picture

We will need more Supercommitee's.  One Supercommitee is not enough.

Salah's picture

To the earlier post who quoted the "super-elite"

Who are the "super-elite"?...please fucking tell us...better yet,  ZH sponsors a contest to identify the 'super-elite' ...gotta be careful.  Remember, Larry Flynt got shot right after he offered $5 million for evidence of the JFK assassination plot.  


snakehead's picture

World coming to an end! Find out how to survive anyway by signing up for my FREE ad that scares you into paying for my premium service where the REAL info is.  F'ing spammer.

Reese Bobby's picture


Buggy's picture

Can we please just stop talking about Greece?  Every single day is the day Greece is going to default, the world is going to implode, and buy gold, and blah blah blah.  Greece is a side show.  Timmy and Benny are a side show.  The real show is restricted to the super elite.  And no, the super elite are not Warren Buffet and the like. 


loub215's picture

How much of the debt is leveraged? If you loose $1, does that wipe out the "equity" of $10? $20? How do you get $600 trillion without MASSIVE leverage, and hence exposure...


SparkySC's picture

How about outlawing Derivatives and Synthetic financial instruments?

Well I guess bankers wouldn't get GIGANTIC BONUSES then would they?


They've got so much leverage, it's like getting a retirement bonus for these clowns if they get so much as a Cherry on a Slot machine.


It's insanity. LET IT ALL FOLD UP!


I'll take my chances.

RockyRacoon's picture

My how times have changed...   I advocated a complete collapse 2 years ago and got junked to oblivion.   Now?  Not so much.

swissaustrian's picture

Bureau of International Settlements

Mhmmm, the number is correct, but the institution...


Germany has said “NEIN” regarding further bailouts for Greece

In fact, the German parliament is going to say "JA" tommorow.



TyIer Durden's picture

The USA is fine.... no worries......... just keep buying Treasuries.... it will all work out.

Freddie's picture

LOL! The Tyler's getting junked because no one got the sarcasm or Obot/Fed/SEC/JPM/Goldman Sack employees are taking a break surfing porn and they get sarcasm.  

PY-129-20's picture



Panafrican Funktron Robot's picture

Would probably appreciate his posting more if he actually, you know, made a call on something, or suggested a particular investment idea, rather than link to some offsite marketing materials.  In fact, I might actually be more interested in clicking on that link, if he did this.

TyIer Durden's picture


brokesville's picture

mmm i love the smell of burnt banker in the morning, smells like victory

DeeDeeTwo's picture

Lick your balls for FREE REPORTS, baby.

virgilcaine's picture

I like Max and folks.

achmachat's picture

how in f$%&'s name did you get your account approved?

Uncle Remus's picture

TyIer - 4 weeks and counting...

TyIer Durden's picture

"Hey, you created me. I didn't create some loser alter-ego to make myself feel better. Take some responsibility!" - Tyler Durden

I was nominated for a fucking OSCAR for this shit.

DeadFred's picture

How did his crazy twin get out? I thought he was committed for life after that last incident?

I think I need to buy a gun's picture

looks like the fed has come to zero hedge....they are watching us

meatball's picture

I don't care how and what, I'd love to see a worldwide collapse.

virgilcaine's picture

Phoenix Capital geting mentioned on Max Keisers ON THE EDGE.. l  Maybe there.s something to it.


How did Maxs campaign to buy silver/destroy JPM plan workout? lol  They both are sinkin together.